Advantages of a Pawn Loan
A financial emergency can occur at any time and many of us are not prepared for this and would need to access cash quickly. Knowing your options in case of an emergency is always good as a backup.
Pawn shop loans are one of the options that are available and like with many loans they have their pros and cons, but their advantages are often not well known. So what are the advantages?
Collateral based solution
Pawn shop loans are a great temporary loan using a high-value item as collateral. You use your item to fund the loan and during the loan term, the item is held securely by the pawn shop until the loan is repaid. As long as you repay the loan in full you can get the item back, so you will only be without it for a short period of time. No other guarantees or collateral are required.
You can use a broad range of collateral items including jewelry, electronic devices, musical instruments, designer goods and even vehicles.
Access cash quickly
You can access cash straight away without having to wait for your application to be processed and approved like many other loans. Once your collateral item has been appraised and you have received an offer, you can get the cash instantly on accepting the offer and handing over the collateral item.
No checks
Unlike many other loans, pawn shop loans don’t require any credit checks and therefore it doesn’t matter if you have bad credit or not, as it won’t affect your loan. In many cases, those with poor credit ratings find that a pawn shop loan is better for them and much easier.
Loans and their value are purely based on the item that you used for collateral and no other questions will be asked such as about your income.
Won’t impact your credit rating
As mentioned above pawn shops do not undertake credit checks, so it won’t impact your credit rating. If you fail to repay your loan to a pawn shop, you won’t get referred to collection agents or have it on your credit report, instead, they will take ownership of your collateral item which they may sell to recover the unpaid money.
Cheapest option
If you have poor credit or want a quick loan with no credit checks then a pawn shop loan can be the cheapest option available compared to loans for similar circumstances, such as payday loans or title loans. Using an item as collateral lessens the risk so the fees and interest can be lower as the risk is lower, plus there are no hidden charges.
Flexible loan options
Pawn shop loans offer a good solution for short-term loans and they allow you to repay the loan early with no additional charges. You may also be able to extend the loan period if you are struggling to repay before the end of the term.
You can also take out multiple loans using different items as collateral as long as you are keeping up with your repayments on the other items. Many other lenders wouldn’t necessarily offer a second loan option.
But like with all loans you should consider your options carefully and choose the solution that works best for you and your circumstances, and be realistic about what you can afford to borrow and repay.